Fannie Mae Moves To Make Purchasing Easier

Fannie Mae announced HomeReady™ mortgage, an innovative lending option aimed at helping creditworthy borrowers with lower and moderate incomes have access to an affordable, sustainable home loan. HomeReady will replace Fannie Mae’s MyCommunityMortgage®.
HomeReady will help qualified borrowers access the benefits of homeownership with competitive pricing and sustainable monthly payments,” said Jonathan Lawless, Vice President for Underwriting and Pricing Analytics at Fannie Mae. Under the new guidelines, Fannie Mae pricing is favorable and simplified for lender use. Borrowers will be required to complete an online education course preparing them for the home buying process and providing post-purchase support for sustainable homeownership. For the first time, income from a non-borrower household member can be considered to determine an applicable debt-to-income ratio for the loan, helping multi-generational and extended households qualify for an affordable loan.
Other HomeReady flexibilities include allowing income from non-occupant borrowers, such as parents, and rental payments, such as from a basement apartment, to augment the borrower’s qualifying income. First-time and repeat homebuyers can purchase a home using HomeReady with a down payment of as little as 3%. Fannie Mae will provide additional details to lenders in the coming weeks through an announcement. Fannie Mae anticipates accepting loans under the HomeReady guidelines in late 2015 as well.
HomeReady will be available to borrowers at any income level for properties in designated low-income census tracts, and to borrowers at or below 100% of area median income (AMI) for properties in high-minority census tracts or designated natural disaster areas. For properties in remaining census tracts, HomeReady borrowers must have an income at or below 80% of AMI.
Source: Fannie Mae

My How Times Change

You may be thinking that we are talking about how the world has changed over the years. For example, who would have thought that a conversation with our children would most likely occur through texting on a machine that many of us did not even grow up with years ago? Here we are talking about how things change from week-to-week. During the past few weeks we have been illustrating factors before and against a rate increase orchestrated by the Federal Reserve Board, whose “Open Market Committee” meets next week.
On the plus side we had a strengthening economy and the creation of jobs. On the negative side we had a correcting stock market, a stronger dollar, a slowing economy overseas and plunging oil prices. In just a couple of days, the stock market rebounded significantly, we had a significant upward revision in the estimate for our economic growth in the second quarter and oil prices rebounded sharply as well. In a matter of a few days, we went from not at all expecting a rate increase to thinking that a rate increase could happen. Just to make things interesting, a few days later, stocks and oil prices reversed again. If you are confused, think how the Fed must feel considering this decision.
And then came the jobs report. What did the jobs report tell us? Even though the addition of 173,000 jobs was less than expected, the unemployment rate dropped to 5.1%, the previous month number of jobs added was revised upward and wages grew a bit more than predicted. Overall, this report is a positive one for the economy and, therefore, increases the chance of a rate increase next week. Most analysts are putting the chances of an increase at 50-50 right now. Though, one thing we can tell you is that the Fed does not like major uncertainty. And there is plenty of uncertainty out there right now. Too much uncertainty may be the overriding factor determining the results of this decision.

The Markets

• Rates on home loans were slightly higher in the past week.
• Freddie Mac announced that for the week ending September 3, 30-year fixed rates rose to 3.89% from 3.84% the week before.
• The average for 15-year loans increased to 3.09%.
• Adjustables were mixed, with the average for one-year adjustables unchanged at 2.62% and five-year adjustables rising to 2.93%.
• A year ago, 30-year fixed rates were at 4.10%, close, but still higher than today’s levels.
• Attributed to Sean Becketti, chief economist, Freddie Mac — “Fasten your seat belts. It’s going to be a bumpy night,” said Bette Davis in All About Eve. That could just as well have been Janet Yellen, or a specialist at the New York Stock Exchange, or the head of the People’s Bank of China on yet another week with lots of volatility on essentially no new information. The 30-year fixed rate increased, but don’t read too much into that. The Fed took great pains at the Jackson Hole conference to keep all their options open and to avoid making too much — or too little — of the situation in China and the volatility in global equity markets. This Friday’s employment report is the last piece of significant, solid evidence the FOMC will have to consider before their September decision. The Street appears to be calling it a coin flip. There won’t be a clear direction for rates on home loans until the Fed makes its September decision, at the earliest.”
Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.